CHICAGO (STMW) - A Libertyville real estate developer who swindled about 100 investors out of more than $8 million, using a Glenview shopping center he built, was sentenced last week to five years in federal prison. The term is to begin Jan. 14.
Forrest David Laidley, 66, owned and operated Forrest Properties Inc., a north suburban real estate development firm, that built the Glen Gateway Shoppes at 2300 and 2350 Lehigh Ave., among other projects.
Laidley pleaded guilty in February to one count of bank fraud and one count of mail fraud, which were included in a 14-count indictment returned in July 2009 by a federal grand jury.
Laidley started raising money in 1999 to build the two-building strip shopping center across from The Glen of North Glenview train station, and was granted permission by Glenview to do so in November 2002. Tenants included Egg Harbor Cafe and D’Agostino’s.
Laidley obtained well in excess of $10 million from investors and financial institutions by offering and selling limited partnership interests at $25,000 per unit, promising returns of 19.5 percent for the first full year of operations and at least a double of equity value in three years, according to the indictment.
Not only did he misrepresent to investors the expected return, he also misrepresented the associated risks; his ownership of property and loan collateral; his financial condition; the status of the investments; and the use of proceeds obtained, the U.S. Attorney’s office stated.
Laidley commingled the fraudulently obtained funds and at times misappropriated them to make Ponzi-type payments to investors. He was accused of paying off some of the Glen Gateway investors with money from newer investors in other development projects in Round Lake. But Laidley never had an ownership interest in the two Round Lake properties, according to the indictment.
Further, Laidley used the funds to repay delinquent loans, including a $100,000 payment on a bank loan; to benefit unrelated real estate development projects; and to benefit himself, including a nearly $17,000 payment on a summer home mortgage, according to prosecutors.
The government presented evidence at Thursday’s sentencing that victims were defrauded of about $9 million total.
About 40 Glen Gateway partners lost more than $2 million when Laidley sold their limited partnership without their knowledge. Laidley had promised he wouldn’t sell the property without the approval of at least a majority of the investment partners, according to the indictment. But, federal prosecutors said, the Glen Gateway project was sold to a third-party purchaser in three transactions without ever seeking investor approval.
About $7 million was lost by purchasers of the promissory notes, whose investments Laidley had personally guaranteed.
Along with the sentence, U.S. District Judge Blanche Manning said Thursday she would also impose restitution in an amount to be determined at future court proceedings.
The prosecution was conducted under the auspices of the Financial Fraud Enforcement Task Force, which includes representatives from federal agencies, regulatory authorities, inspectors general and state and local law enforcement. The Lake County State’s Attorney’s Office assisted the U.S. Attorney for the Northern District of Illinois and the Chicago office of the FBI.
–Pioneer Press, via the Sun-Times Media Wire
(Source: Sun-Times Media Wire © Chicago Sun-Times 2010. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)